Smartphone giants like Samsung are going to talk up ‘AI phones’ this year — here’s what that means
Samsung Electronics Co. Galaxy S24 smartphones during a media preview event in Seoul, South Korea, on Monday, Jan. 15, 2024. Samsung, the world’s most prolific smartphone maker, is leaning into artificial intelligence as the key to unlocking greater sales this year. Photographer: SeongJoon Cho/Bloomberg via Getty Images
SeongJoon Cho | Bloomberg | Getty Images
Artificial intelligence phones: these are the buzzwords you’ll likely hear this year, as smartphone players look to jump on the AI hype to boost sales of their devices after a difficult stretch of time.
OpenAI’s ChatGPT, released in late 2022, sparked huge interest in generative AI, specifically — models trained on huge amounts of data that are able to produce text, images and prompts from user videos. Since then, AI excitement has touched every industry and entered the popular imagination.
Smartphone makers see a chance to cash in and are going to be touting the tech at the Mobile World Congress (MWC), the biggest mobile industry trade show in the world, which kicks off on Monday in Barcelona, Spain.
“Nobody wants to be seen as being behind the curve, and AI is just the talk of the town. It is the buzzword this year that all the vendors are going to be jumping on,” Bryan Ma, vice president of client devices research at IDC, told CNBC.
What is an AI phone?
The gear is harder to define, and it depends on which manufacturer you ask.
Analysts who spoke to CNBC broadly agree on a few things — that these devices will have more advanced chips to run AI applications, and that those AI apps will run on-device rather than in the cloud.
Companies like Qualcomm and MediaTek have launched smartphone chipsets that enable the processing power required for AI applications.
But AI tech inside phones is not new. Some aspects of AI have been in devices for years and have allowed features such as background blur effects on smartphones and picture editing.
What is new is the introduction of large language models and generative AI. Large language models are huge AI models trained on vast amounts of data that underpin applications like the widely popular chatbots. These models unlock new features, such as the ability for chatbots to generate images or text from a user prompt.
“It is not just about having a chatbot, we have had these virtual assistants for a while. The difference is, it is generative now, so they can create a poem or summarize meetings. If it is about text to image creation, that was something that wasn’t done before,” Ma said.
The other big part of the AI smartphone puzzle is the term “on-device AI.” Previously, many AI applications on devices were actually partly processed in the cloud, then downloaded onto the phone. But advanced chips and the ability for large language models to effectively become smaller are likely to drive more AI applications to be run solely in the device, rather than in a data center.
“I think one of the big stories at MWC will be the ability of the AI models too run natively on the devices themselves and that is where it potentially starts to become a bit more of a gamechanger,” Ben Wood, chief analyst at CCS Insight, told CNBC.
Smartphone makers say on-device AI improves the security of gear, unlocks new applications and also makes them faster, since the processing is done on the handset.
This could unlock new applications that developers could create, both Ma and Wood said.
Eventually, Wood said, smartphone makers want to achieve “anticipatory computing” — the idea that AI “is smart enough to learn your behavior as a user and make the device so much more intuitive and predicting what you want to do next without you having to do much.”
But are AI phones a reality right now?
Sort of. AI has been used in devices for some time, but the new era of on-device AI with large language models is still in its early stages.
Device makers at MWC are going to show off lots of AI-powered features — and we are already seeing some of it. In January, Samsung launched its flagship Galaxy S24 smartphone range, touting its AI capabilities. One feature that drew attention was the ability to circle an image or text you’re looking at on any app, then immediately search that on Google.
MWC will likely include demonstrations of AI features, from camera apps to chatbots on phones.
But the reality is that a lot of these perks are not actually on-device and still rely on processing in the cloud, according to IDC’s Ma. He added that, even with AI capabilities on devices, it will take a “number of years” before third-party developers figure out a “killer use case or that compelling use case that consumer can’t do without.”
Wood said the danger is that smartphone manufacturers talk a lot about AI, rather than about the experiences that the technology can deliver for users.
“Consumers have no idea what an AI smartphone is, they need the use cases to go round it,” Wood said. The risk is that there is “AI fatigue.”
Ultimately, the lofty AI experiences smartphone makers are dreaming of could be a long way out.
“We are building an unbelievable foundational platform for AI on device. 2024 will be the year we look back on and say that’s where it all started to happen but it could be a long time before we start of these benefit of that in terms of game changing experiences,” Wood said.
Technology
Nvidia positioned to weather Trump tariffs, chip demand ‘off the charts,’ says Altimeter’s Gerstner
Altimeter Capital CEO Brad Gerstner said Thursday that he’s moving out of the “bomb shelter” with Nvidia and into a position of safety, expecting that the chipmaker is positioned to withstand President Donald Trump’s widespread tariffs.
“The growth and the demand for GPUs is off the charts,” he told CNBC’s “Fast Money Halftime Report,” referring to Nvidia’s graphics processing units that are powering the artificial intelligence boom. He said investors just need to listen to commentary from OpenAI, Google and Elon Musk.
President Trump announced an expansive and aggressive “reciprocal tariff” policy in a ceremony at the White House on Wednesday. The plan established a 10% baseline tariff, though many countries like China, Vietnam and Taiwan are subject to steeper rates. The announcement sent stocks tumbling on Thursday, with the tech-heavy Nasdaq down more than 5%, headed for its worst day since 2022.
The big reason Nvidia may be better positioned to withstand Trump’s tariff hikes is because semiconductors are on the list of exceptions, which Gerstner called a “wise exception” due to the importance of AI.
Nvidia’s business has exploded since the release of OpenAI’s ChatGPT in 2022, and annual revenue has more than doubled in each of the past two fiscal years. After a massive rally, Nvidia’s stock price has dropped by more than 20% this year and was down almost 7% on Thursday.
Gerstner is concerned about the potential of a recession due to the tariffs, but is relatively bullish on Nvidia, and said the “negative impact from tariffs will be much less than in other areas.”
He said it’s key for the U.S. to stay competitive in AI. And while the company’s chips are designed domestically, they’re manufactured in Taiwan “because they can’t be fabricated in the U.S.” Higher tariffs would punish companies like Meta and Microsoft, he said.
“We’re in a global race in AI,” Gerstner said. “We can’t hamper our ability to win that race.”
Jaque Silva | Nurphoto | Getty Images
YouTube on Thursday announced new video creation tools for Shorts, its short-form video feed that competes against TikTok.
The features come at a time when TikTok, which is owned by Chinese company ByteDance, is at risk of an effective ban in the U.S. if it’s not sold to an American owner by April 5.
Among the new tools is an updated video editor that allows creators to make precise adjustments and edits, a feature that automatically syncs video cuts to the beat of a song and AI stickers.
The creator tools will become available later this spring, said YouTube, which is owned by Google.
Along with the new features, YouTube last week said it was changing the way view counts are tabulated on Shorts. Under the new guidelines, Shorts views will count the number of times the video is played or replayed with no minimum watch time requirement.
Previously, views were only counted if a video was played for a certain number of seconds. This new tabulation method is similar to how views are counted on TikTok and Meta’s Reels, and will likely inflate view counts.
“We got this feedback from creators that this is what they wanted. It’s a way for them to better understand when their Shorts have been seen,” YouTube Chief Product Officer Johanna Voolich said in a YouTube video. “It’s useful for creators who post across multiple platforms.”
WATCH: TikTok is a digital Trojan horse, says Hayman Capital’s Kyle Bass
CEO of Meta and Facebook Mark Zuckerberg, Lauren Sanchez, Amazon founder Jeff Bezos, Google CEO Sundar Pichai, and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. president in the U.S. Capitol Rotunda in Washington, Jan. 20, 2025.
Saul Loeb | Via Reuters
Technology stocks plummeted Thursday after President Donald Trump’s new tariff policies sparked widespread market panic.
Apple led the declines among the so-called “Magnificent Seven” group, dropping nearly 9%. The iPhone maker makes its devices in China and other Asian countries. The stock is on pace for its steepest drop since 2020.
Other megacaps also felt the pressure. Meta Platforms and Amazon fell more than 7% each, while Nvidia and Tesla slumped more than 5%. Nvidia builds its new chips in Taiwan and relies on Mexico for assembling its artificial intelligence systems. Microsoft and Alphabet both fell about 2%.
Semiconductor stocks also felt the pain, with Marvell Technology, Arm Holdings and Micron Technology falling more than 8% each. Broadcom and Lam Research dropped 6%, while Advanced Micro Devices declined more than 4% Software stocks ServiceNow and Fortinet fell more than 5% each.
The drop in technology stocks came amid a broader market selloff spurred by fears of a global trade war after Trump unveiled a blanket 10% tariff on all imported goods and a range of higher duties targeting specific countries after the bell Wednesday. He said the new tariffs would be a “declaration of economic independence” for the U.S.
Companies and countries worldwide have already begun responding to the wide-sweeping policy, which included a 34% tariff on China stacked on a previous 20% tax, a 46% duty on Vietnam and a 20% levy on imports from the European Union.
China’s Ministry of Commerce urged the U.S. to “immediately cancel” the unilateral tariff measures and said it would take “resolute counter-measures.”
The tariffs come on the heels of a rough quarter for the tech-heavy Nasdaq and the worst period for the index since 2022. Stocks across the board have come under pressure over concerns of a weakening U.S. economy. The Nasdaq Composite dropped nearly 5% on Thursday, bringing its year-to-date loss to 13%.
Trump applauded some megacap technology companies for investing money into the U.S. during his speech, calling attention to Apple’s plan to spend $500 billion over the next four years.
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